Cameron today outlined his plans for economic responsibility to replace “irresponsible capitalism and irresponsible government” under Labour. He began his attack by accusing the prime minister of basing his financial decisions on “false assumptions” that he said had left the economy in ruins.
Among them were the ideas that a successful economy could be built on a “narrow base of housing, public spending and financial services” and “that you could abolish boom and bust, and that the good times would last forever”.
Eh? A Tory complaining that the economy is too dependent on housing and financial services? Yes.
“We’ve got to broaden our economic base to include more science, more hi-tech services, more green technologies, more engineering and more high-value manufacturing, drawing upon a much wider range of industries, markets, people, towns and cities.”
Did he just say that? Did Dave from PR just announce a medium-term industrial strategy? This is, by any measure, a political moment of the first order; the Tories, the people who decided UK plc should be a huge investment bank based in London, ran a high interest rate and strong pound policy that killed off most of engineering and high-value manufacturing, and whose pet thinktank apparently believes the North should be evacuated…they said that?
Perhaps they’ve realised that yes, Virginia, the UK is no longer an oil exporter because they pissed it all up the wall in the 80s and 90s, and that turn-London-into-a-huge-investment-bank thing ain’t looking so clever any more. Perhaps they’ve found one of Michael Heseltine’s old memos from his shakeout’n’invest period in the files. OK, then, where do I sign?
But what is this?
He dismissed critics who believed that “permanent state intervention” was the only way to avoid a repeat of the problems. Those who believed the change the country needed was a “turn to the left” were wrong, he said, as he promised to inject greater responsibility into the economy through a centre-right platform of measures
Responsible us back the DNA-sequencer activities of Amersham International plc, willya? Could you perhaps responsible up a wave power industry while you’re there? Anyway, before we slide into bitterness…there’s also this.
He promised a new debt responsibility mechanism, with the Bank of England required to write regularly to the Financial Services Authority about sustainability of the level of debt in the economy. “If the level of debt is growing unsustainably, the bank will instruct the FSA to ensure banks either slow their lending or put aside more capital.”
So no permanent state intervention….except for the bit where you take powers to intervene in the management of the entire banking sector, including the bits that are still independent of the state. Also, direct government controls on lending? Isn’t that the Sovietisation of Britain or something? What next, exchange control stamps in your passport?
But that’s apparently it. Cameron is planning to regenerate the entire industrial base (and “high tech services”, which I think means BT Global Services ‘cos we don’t have any other firms like that since Leo Computers in the 1960s), and he intends to do this simply by running a smaller budget deficit, and imposing a bank lending corset. He’s not even promising any tax cut ponies.
There is one actual measure in there, though. Apparently he wants to change the insolvency laws to protect “sound but struggling businesses” (and again, there’s a sick laugh from the 80s for you…). But how is this going to interrelate with the Cameron Corset proposal? Camorset for short, which sounds nicely like the sort of southwest-central shire where the buggers come from. If it’s harder to cut off credit to those “sound but struggling” businesses, but the banks have to reduce their loan books ‘cos Dave says so, where do they cut? Doesn’t that imply they’ll have to bear down on everyone else even more? Why should a sound business that’s not struggling quite enough to be protected take the punishment? (Why don’t any Tories seem to understand marginal economics at all?)